Mountain Province Diamonds Inc. is focusing all of its efforts on raising and conserving money.
On Monday, Nov. 9, the company and its joint venture partner De Beers announced plans to pause all discretionary spending and cut costs where possible with the goal of “maximizing cash generation.”
“We have agreed with De Beers to pause all discretionary spend and reduce costs wherever prudent,” Mountain Province Diamonds president and CEO Mark Wall said in a news release. “We continue to monitor the market closely, while focusing on the controllables, which are costs, production and operating efficiencies. We aim to maintain the optionality of growth opportunities for an improved price environment.”
Mountain Province Diamonds will reduce its costs by suspending growth-related expenditures at the Gahcho Kue mine, located 280km northeast of Yellowknife. That includes “pausing spending and further work on the Gahcho Kue underground expansion,” the news release stated.
The company’s vice-president of exploration, Tom McCandless, will be stepping down from his full-time role to offer support on an “as needs basis” as a consultant.
Wall attributed the company’s decision to reduce costs to the pressures facing the diamond market, including “a slowing market in the US, low Chinese demand, and the uncertainty in the diamond supply chain related to lab-grown diamonds and continued supply of Russian diamonds following the invasion of Ukraine.”
He said the market “deteriorated further” in the third quarter of this year, and contended that major diamond producers have been “significantly cutting their sales” as a result. He also noted that India has imposed a two-month moratorium on rough diamond imports until Dec. 15.
“The hope being that this pause in selling rough diamonds, together with December being the busiest time for diamond purchases, will reduce the excess supply in the sector and stabilise prices,” said Wall. “For our part, the company took the decision to withhold some of our lower value goods during quarter three and took the unprecedented step in October to sell some of our production directly to our joint venture partner, De Beers.”
Mountain Province acquired the Gahcho Kue site in 1992. It entered into a joint venture agreement with De Beers in 2002, and amended that agreement in 2009, selling 51 per cent ownership interest to De Beers.